Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Examination of witnesses (Questions 220 - 239)

WEDNESDAY 27 JANUARY 1999

MR HUGH MCCOY and MR JIM BUCKLEY

  220.  Then let us ask you, because you are the best sort of person, what can we do to increase the number of seafarers? Tell me, does this Maritime London you have been talking about feel any responsibility towards increasing the number of British seafarers?
  (Mr McCoy)  I think the answer is very matter of fact. If you are going to increase the number of seafarers the environment has to be there for people to buy ships first. I think it comes that way round.

  221.  You are not saying "we do not need to train them because we do not have many shipowners", are you?
  (Mr McCoy)  No, I am putting the emphasis the other way around. I am really saying that if the environment in London or under British registries was favourable so that over a period of time, and I think that is what it takes, tonnage starts to re-accumulate under the registry then I think training will follow. I do not think that because you have a bank of merchant seamen that people go out and buy ships. That is a very simple statement. In terms of our own responsibility, because our business is reliant upon international trade I do not think our members feel a responsibility but of course we do something because we want to support this. Jim Buckley has some figures on what we at the Baltic have contributed and I would like him to tell you, with your permission.

  222.  Please.
  (Mr Buckley)  Thank you, Chairman. We have traditionally supported training either directly through the Lloyd's Officer Cadet Scheme and through bursaries at maritime universities, we have three in operation at the moment, for the training of—

  223.  Wait a minute, three bursaries?
  (Mr Buckley)  At maritime universities.

  224.  We are not talking about three students, are we?
  (Mr Buckley)  No, we are talking about three bursaries. We have also earmarked some money for the new Maritime Training Trust.

  225.  So how many people is that overall?
  (Mr Buckley)  We are talking about £30,000 a year.

  226.  Mr Buckley, you are not answering my question. How many students are we talking about?
  (Mr Buckley)  The Lloyd's Officer Cadet is one and the bursaries are very small but they are spread by the universities amongst a number of students. It is a handful. In addition, our members do some training themselves and they support students through the Institute of Chartered Ship Brokers.

  227.  How many of your members do that training?
  (Mr Buckley)  I do not have those figures.

  228.  So it is not something really that is ever discussed?
  (Mr Buckley)  No, it is a modest contribution.

Mr Stevenson

  229.  Do you think it could be more or that it should be more?
  (Mr Buckley)  I think it goes back to the first part of the question, what is our responsibility? We use a small number of trained seafarers in our business and I think the response we have made in terms of financial commitment, which is the only way we can do it as an institution, is appropriate to that level.

Mr Donohoe

  230.  What percentage of your staff come from abroad?
  (Mr Buckley)  The percentage of the Exchange itself or ship brokers?

  231.  In your employment.
  (Mr Buckley)  Actually of the Exchange itself?

  232.  Yes.
  (Mr Buckley)  I have one who comes from abroad.

Chairman

  233.  There is a difference, we are not talking about this.
  (Mr Buckley)  We are talking about an institution based in the City. If you are talking about ship broking more generally about a third of people employed by Baltic members are from other nations and there are 45 different nations involved. The highest numbers are Greeks followed by Danes and then there are 43 other countries.

  234.  That would flow from your national commercial involvement?
  (Mr Buckley)  Indeed it would, yes.

  235.  I want to bring you on to something different. I want to bring you to the point you made about Singapore and Vancouver and the benefits that they bring. Do you want to tell us a bit about that?
  (Mr McCoy)  Yes, please. Can I just make a very general remark on Singapore because interestingly we had the Minister of Singapore in our office last week asking us—

  236.  A very sharp fellow.
  (Mr McCoy)  Yes, we thought he was a very sharp fellow. He must have thought that we were fairly simple because he was asking us how he could create a London market in Singapore and whilst we are very friendly we decided not to do that. Can I just make three very quick distinctions in terms of these enterprise centres because it is a very important aspect to understand. We have open registries like Liberia, Malta and Cyprus who are essentially flags of convenience where the ship has almost no link with the country other than what goes on to the stern of the ship. We then have the parallel registries where there is a link between the second registry and the country. I think Norway has been a very good example of this where there is a tangible link: low tax regime and ships go from one register to the other. The Norwegian Open Register now is about 28 million tonnes. Then we have what are really enterprise zones. Vancouver and Singapore have been two very good examples and if I may I could add a third one which is Shanghai. The Shanghai-ese have been flattering, they have actually built a mini Baltic Exchange in Shanghai which I visited. We did not actually tell them that our own trading side is becoming redundant, the marketplace, the way of trading, so actually I think they have built a very handsome white elephant in a sense.

  237.  Oh dear, you will remember that we are taking a record here. The Chinese have a long habit of reading.
  (Mr McCoy)  The important thing about the two areas you have specifically mentioned is that both have offered to shipowners and operators and brokers a tax-free period, and in both cases I think it has been ten years. Jim has a record of what Singapore offered if you are interested in hearing it. Both of these were enterprise tax-free zones for maritime activities. The Singapore registry has reacted dramatically, it has gone up to about 28 million tonnes. The Minister of Communications was keen that he added on the services that are so boasted by London and I guess they are going to come slowly. Singapore in a sense is gathering momentum and will be successful as an entrepreneurial hub in the Far East. Vancouver has withered on the vine and the reason it has withered on the vine is it is in the wrong time zone, it is in the wrong country and it has not been a place where shipowners could go to register ships and operate from successfully bearing in mind it is ten hours away from London, the main marine market of the world. Our experience of Vancouver is that the Canadian Government were very welcoming to foreign nationals, particularly the Chinese coming out of a place like Hong Kong, but in fact it has not worked. But, by the same token, Singapore is working and will be a strong competitor for us in the future.

  238.  Because it is in fact in exactly the position that you talk about.
  (Mr McCoy)  Exactly.

  239.  It is in the right time zone, it has very welcoming habits and it is going to learn from other people's experience. Tell us about the ring-fenced tonnage tax—what is your view?
  (Mr McCoy)  I think the shipowners are better able to answer this question, so I will just give a very quick bullet reply. This type of taxation of shipping is of course very commonplace. One of the earlier contributors talked about Greece. Greece has got a dead simple system and a huge fleet. They charge $1 per deadweight, so I think this, if successful, would be a benefit to the UK registry. I cannot quantify it because I have no way of doing it, but I would imagine it is inevitable that the UK registry would benefit from it. I think I would add one point from my own experience, which is that it takes time. Some shipowners will make up their mind very quickly and there has been an example given this afternoon, but I think over a period of time, if you are trying to attract ships into the British registry which do not exist under British ownership, and of course there is a very large amount that does, then I think this takes time to see how it works, whether it is a stable regime, whether there is a catch in it. People are very canny and I think a lot of this tonnage would be moving from what is really a tax-free environment to another one with a lower tax and people will need to weigh that up. In short, I would welcome the measure. I think it will enhance the British fleet and if it enhances the British fleet, it will add to some of our business which, as I explained in our opening statement, is very small.


 
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